my mortgage has exceeded the current value of my home and i don't know how to pay it off as i had been laid off and have just a few days ago found a new job. my spouse is going through some medical treatment which is taking a lot of our hard earned money. I was thinking of a short sale but what happens to the remaining debt, is there a way i can get away without paying it off? are there tax issues here? I've heard of the HAFA, what's the criteria to qualify and what's the maximum time they'll give me just to payoff the mortagage?? I'm in sanjose, california

In short sale the deficit amount is forgiven. Shore sale is the sale of your house for an amount less than the amount owed on the mortgage, as agreed to by the lender. This will hurt your credit score negatively, though less than a foreclosure. After a short sale, the lender can demand the remaining balance from you. If you can't pay, the lender can garnish your wage. As for the tax issues, in short sale too, you will have to deal with the tax man.

However, as you have already got a new job, you can try to negotiate a loan modification with the lender. Write a hardship letter, and include a copy of your monthly income and expenditure. You will get a sample loan modification/hardship letter with this community. In loan modification the lender may lower the mortgage rate and extend the loan term. There can also be a reduction in the outstanding loan balance.

There are various criteria for Home Affordable Foreclosure Alternatives Program (HAFA). If you are facing hardship, and are thus unable to make mortgage payments, you can apply for HAFA. Moreover, the property should be the borrower's primary residence. When you apply for HAFA you will have to sign an Affidavit of Financial Hardship, and will have to provide your pay stubs.

As for the time within which you will have to pay off the mortgage, depends on the mortgage company. You need to talk about this to the mortgage company.

1) Many sevicers on short sales require you to acknowledge personal liability on any deficiency. If foreclosed on you may or may not be liable depending if you are in a deficiency state or not. In Arizona usually can not be sued for deficiency after a foreclosure sale.

But in Nevada and many others they can come after you for a post foreclosure judgment.

HAFA Program to Aid Short Sales Points

Stands for Home Affordable Foreclosure Alternatives

Preappoved short sales terms from the bank if it participates.

Does not apply to Fannie or Freddie loans (about 70% of all first mortgages on Fannie/Freddie owned or guaranteed)

Said Mark Brandemuehl of Motovo, a brokerage and listing site. “States in recourse will increase their volume of short sales and deeds in lieu.” California and Florida, two of the hardest hit states with foreclosures, are both non-recourse states. Brandemuehl predicts the HAFA program won’t have much impact in these states due to this.

Servicers are very hard to deal with since they get far more fees to foreclosure, own and resell properties than they get under any of he modification programs which are basically voluntary unless your Fannie or Freddie - but they delay those modifications as long as possible to collect the servicing fees.

AndrewsGuest

Thu Jun 03, 2010 9:53 am
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Is there no one in this community to reply all my questions?

Am still waiting for my reply for
"is there a way i can get away without paying it off? are there tax issues here?"

Aaron has given answers to almost all of your queries. However, I would like to add that, the eligibility criteria for HAFA are:
* Your house should be your principal residence
* The loan should be a first lien mortgage originated on or before January 1st, 2009.
* You have been delinquent toward the mortgage and have missed at least 2 payments
* The unpaid principal balance on the loan is no more than $729,750 for a single-family property, $934,200 for a dual-unit property, $1,129,250 for a three-unit property, or $1,403,400 for a four-unit property.
* "The total monthly payment on the mortgage (including principal, interest, property taxes, hazard and flood insurance, condominium association fees, homeowner’s association fees, and any escrow payment shortage amounts subject to a repayment plan) is more than 31% of the gross income of all borrowers on that mortgage."

Your personal details (name, email address and phone number) will be delivered to the company advertised on the Creditmagic after ve agreed to go for the counseling session by filling out the no-obligation form. However, it is your discretion to accept or reject their services.

Not all the creditors/debt collectors agree to trim down the outstanding balances, interests, and fees payable by the consumer.

Consumers working with the debt relief companies can still be sued by the creditors/collection agencies.

Debt relief services may have a diminishing effect on the creditworthiness of the consumer. The total outstanding balance may increase as the additional fees get accrued.

The overall amount saved by the consumer through the debt relief services is considered as taxable income by the IRS.